The Stock Exchange For Beginners

The articles pages are designed to explain the stock exchange in a
way that most beginners can understand. In short, this stock exchange
for beginners section is designed to be an indispensable guide to
investment for the absolute newbie.

I urge you to sit down and have a good read of the messages listed
below. Why? Each month I post one or more of my articles on a number of
websites and the following 'Stock Exchange For Beginners' articles
created on average 10 times as many hits to my site as my normal writing
would.

For days after each posting, my inbox was full of notes from
readers and new subscribers. They were all grateful that I could make a
complex subject so simple and were thanking me for my efforts. What can I
say, but that these must be popular for a reason!

Since then, this section has been expanded to provide as much
broad detail as possible. Newcomers to the investment world probably do
not need 'tips', instead they need to build a broad base of knowledge.
This section will hopefully help to point you towards those broad bases.

In this regard, these are the 'timeless' pieces of investment
info... The building blocks which are used to make a successful stock
market investor.

Other useful articles designed to help the newcomer starting out to understand the stock market
can also be useful in providing a broad starting point. We recommend that you read widely around the subject.

Me, me, me

By following the links below, you will find articles that explain some of the mindsets and selection criteria that have helped to guide such luminaries as Warren Buffett and Peter Lynch. From there, it will be important to think deeply about your own personality and psyche to get as good an understanding as possible about what drives you, how and why.

This kind of information can help you to determine potential opportunities by answering some important questions, such as:

- How much risk am I willing to take? (Should you be buying penny shares or blue chips?)

- How aggressive am I? (Should you be day trading or investing in a mutual fund?)

- How much study am I prepared to put in to understand and follow markets? (None ever or several hours each week?)

- How hard am I prepared to work? (How demanding are your other activities in life?)

- What specialist knowledge do I already possess? (What industry sectors have you worked in?)

- What is my overall goal? (To protect and grow your nest egg a little or to become a trading titan?)

While this all may sound a little prosaic at first, it is important. It is especially important should you choose to trade in the markets. Under the heightened stress and strain of making instant decisions that could have wide effects on your life (if they go right or wrong), being able to understand yourself will prove vital.

In many ways, this is similar to games such as poker and blackjack where there are elements of skill and luck involved but combined with potentially significant amounts of money. At the extreme end of the spectrum, day trading can be a very stressful experience.

Under such circumstances, simply being smart is not enough. It will be important to be trained and prepared. This will not happen overnight but will instead be something that you work on for years to come. Just think for a moment about how smart and hard working most Wall Street traders and fund managers are. They spend years on their education and training to prepare them for the best jobs in financial services, plus they also have some of the best information sources that money can buy - things like Bloomberg terminals - to help them, so you ought to expect to work hard!

A different type of pressure comes for the independently minded fund managers and asset allocators. For example, for long periods of time, value investors will be doing the work of research (looking for opportunities) but probably not actually making any buy or sell decisions. Meanwhile, the stock market may well be racing ahead helping less patient and skilled people to regular profits. The world is a cruel place and we all need to be able to deal with it as best and rationally as we can.

This means that a certain amount of detachment from the day to day movements of the NYSE, NASDAQ or FTSE may be required while the investor is hunting for bargains. This level of mental control will take enormous amounts of effort.

It really is much harder than you might imagine to read the Wall Street Journal or Financial Times every day, checking prices of interesting companies seemingly for forever, waiting and watching for a great investment opportunity with money sat waiting in a bank account, literally burning a hole in the pocket. Such value investors need to have incredible mental control.

Just remember that there is no free lunch when it comes to making money in the stock market. You will need to work hard for it. We all do.

We wish you luck with your investing and hope that the following pages prove to be a worthwhile starting point.